Setting up your own limited company may be a worthwhile option if you are looking to contract long term and your earnings bring you into the higher tax bracket. We strongly recommend that you speak with a qualified accountant and legal advisor before settling up a limited company.
If you work as a Limited Company contractor, CK Associates will have a contract for your services with your limited company, reflecting the contract we have with the hiring company or client. You will be the named consultant on the contract. Effectively you will be employed by your limited company, so the 13.8% Employers National Insurance requirement and 12% paid holiday element will be paid to your limited company on top of what would have been the PAYE rate.
Be aware that you will incur costs for setting up the company, for provision of your own insurance cover, for annual returns and an accountant’s services.
You will be required to complete your timesheet weekly and have it approved by the client. However in order to get paid, your company will invoice CK Associates weekly, fortnightly or monthly. Funds can only be paid into your company bank account and not directly to you personally.
Tax and Expenses
This can be the most tax-efficient way of working. As with going PAYE, you may only claim expenses from CK Associates that the client has agreed to pay. However you can offset other expenses such as your travel to work, lunch etc. Please ask your accountant for advice on what you can claim.
Other Documentation required by CK Associates for Limited Company contractors
- Guarantee of Undertaking to protect CK in relation to the contractor’s tax liability
- £5m Employers’ Liability Insurance (for company) OR Signed Employers’ Liability Insurance Exemption Declaration
- £1m Public Liability Insurance
- £250K Professional Indemnity Insurance
- VAT Registration Certificate
- Certificate of Incorporation for the Ltd Co
- Confidentiality Agreement
- Company bank account details and proof it is a business account rather than a personal account
Questions you will be asked before your Limited Company contract can be drawn up
- Do your assignments usually fall inside IR35 or outside IR35?
- Do you prefer to Opt Out of the Conduct Regulations?